July 2015- The slowdown in productivity over the past decade has added to concerns about the long-term economic outlook. But new OECD research shows that policy reforms can revive the diffusion of innovation and make better use of human talent to clear the path for higher and more inclusive productivity growth.

Productivity is about “working smarter”, rather than “working harder”.

It reflects our ability to produce more output by better combining inputs, owing to new ideas, technological innovations and business models. Innovations such as the steam engine, electrification and digitisation have led to radical changes in the production of goods and services, raising living standards and well-being. Indeed, the large differences in income per capita observed across countries mostly reflect differences in labour productivity. At the same time, productivity is expected to be the main driver of economic growth and well-being over the next 50 years, via investment in innovation and knowledge-based capital. Thus, it is of little surprise that the recent productivity slowdown has sparked widespread interest, with the debate centring on the extent to which the productivity slowdown is temporary, or a sign of more permanent things to come.